Energy: VAT
The question
To ask the Chancellor of the Exchequer, whether she has made a recent assessment of the potential merits of extending VAT energy-saving materials (ESM) relief to all domestic retrofit projects which include ESMs where other works are undertaken as part of the same project.
Answered by Dan Tomlinson
This Government is committed to improving the quality and sustainability of our housing stock, through improvements such as low carbon heating, insulation, solar panels, and batteries. This will be vital to making the UK more energy resilient and meeting our 2050 Net Zero commitment.
Installations of qualifying energy-saving materials (ESMs) in residential accommodation and buildings used solely for a charitable purpose benefit from a temporary VAT zero rate until March 2027, after which they will revert to the reduced rate of VAT at five per cent.
VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. This includes most construction works. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer. Exceptions to the standard rate have always been limited and balanced against affordability considerations.
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